Dealership profits remain nearly double pre-pandemic levels and blue sky values have more than doubled. Regulatory headwinds have eased and public groups are spending millions to gobble up stores.
In the busy buy-sell market, AI has begun to factor into dealership valuations as buyers are increasingly asking about technology during acquisitions, according to industry experts.
Driving the news: Dealerships using AI now are setting themselves up for both operational improvements and stronger sale valuations in the future.
That’s one of the themes that was reiterated in a webinar recapping the conference on maximizing dealership value hosted by advisory firm Haig Partners during NADA in Las Vegas.
“It’s not saying that you have to master AI in order to deploy it, but you need to get started on it now,” said Alan Haig, president of Haig Partners. “And those people that start early, you’re going to have a compounding effect on the benefits over time. If you’re starting before your competitors, then you’re going to reap a greater share of the gains from AI.”
For context: Dealerships equipped with AI present as a modern, scalable profitable investment when thinking in terms of valuation.
Using AI helps boost profitability and margin protection by reducing labor costs and making profits more predictable thanks to more efficient operations.
AI also prioritizes high-value leads and optimizes service schedules, which helps increase revenue with less staff.
Early adopters have seen higher online reputation score.
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Why it matters: Using AI to optimize operations helps improve profits and a store’s bottom line, therefore increasing it’s value.
Referencing a conference discussion with Steve Greenfield of Automotive Ventures, Haig said that for every dollar of revenue, a dealer makes about a 2- 2.5% profit, calling it good and bad news.
“The bad news is, we don't keep a lot of what we generate, but if we can keep just a small fraction more of the gross profit of the revenue we generate, it can have a huge impact on our bottom line,” Haig said. “So if we can go from 2.5% percent to 3%, that's a lift of 20% or 25% in terms of dealership profits.”
Nuts and bolts: Starting small with AI integration is OK, Haig said, but starting now is important.
Even small implementations such as AI-powered chat for sales, service or scheduling can increase benefits over time.
Reduce labor needs and streamline workflows to show buyers a profitable, efficient operation.
Tie it all together. Integrated data across sales, service, and marketing gives buyers confidence in this increasingly data-driven business.
Record metrics like lead conversion, service utilization, and customer satisfaction to provide tangible proof of improved performance.
The signal: Integrated AI systems in dealerships will become more important in the next couple of years in terms of dealership valuation. Dealers who don’t start learning and using it now risk falling behind competitors, ultimately lowering the dealership’s value to a buyer.
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